Trading Fee
The cost charged by a broker or exchange to execute an order on your behalf.
Plain-English Meaning
Trading fees are the "toll" you pay to the platform for opening and closing a trade. In crypto, this is often a small percentage of your trade size. In forex, it might be built into the spread or charged as a flat commission.
Why It Matters
Frequent trading with high fees will quickly eat away at your profit. Understanding fee structures is essential for active traders, especially when calculating the actual net return of a strategy.
Simple Example
If you buy $1,000 worth of Bitcoin and the exchange charges a 0.1% trading fee, you will pay $1 for the transaction, reducing your actual position value to $999.
This educational example uses selected assumptions for reference calculation purposes. Real conditions may vary by broker, exchange, or instrument.
Beginner Mistake
Ignoring trading fees when scalping. If your profit target is very small, the fees for opening and closing the position can sometimes exceed your actual trading profit.